What changed
The Master Circular consolidates all fraud-related instructions issued since July 1, 2010, including clarifications provided during the year. It updates the previous circular and is now available on the RBI website. The content and reporting requirements remain consistent with the earlier framework.
What it means for you
Urban co-operative banks must adhere to a standardized fraud reporting system with clear thresholds: frauds under Rs. 1 lakh, between Rs. 1 lakh and Rs. 25 lakh, and Rs. 25 lakh and above. Delays in reporting can lead to penal action, and banks must fix staff accountability for delays. A senior official must be nominated to handle all fraud-related returns.
What you must do
- Nominate a senior official responsible for submitting all fraud returns to RBI.
- Report frauds within the specified timeframes based on amount thresholds.
- Ensure fraud reports include full information and follow-up actions taken.
- Fix staff accountability for any delays in reporting fraud cases.
- Use the prescribed formats (FMR-1 to FMR-4) for reporting frauds and related incidents.
Who it affects
All Primary (Urban) Co-operative Banks, Senior management and compliance officers of urban co-op banks, Bank staff handling fraud detection and reporting
What are the reporting thresholds for frauds?
Frauds under Rs. 1 lakh, between Rs. 1 lakh and Rs. 25 lakh, and Rs. 25 lakh and above each have different reporting procedures. Frauds by unscrupulous borrowers and attempted frauds also have specific reporting requirements.
What happens if we delay reporting a fraud?
Delays can result in penal action under Section 47(A) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). Banks must also fix staff accountability for delays.
Which formats should we use for reporting?
Use FMR-1 for actual or suspected frauds, FMR-2 for quarterly outstanding frauds, FMR-3 for quarterly progress, and FMR-4 for dacoities, robberies, thefts, or burglaries.